Papa John, Weinstein, Wynn: The danger of brands named after people

John Schnatter, the “papa” of Papa John’s Pizza (PZZA), has resigned as chairman of the company he founded in 1984. He will remain a member of the board.

According to a Forbes story on Wednesday that Schnatter did not deny, he used the n-word on a conference call in May. Ironically, the purpose of the call, with a marketing agency called Laundry Service, was to train Schnatter to prevent additional PR gaffes. Schnatter reportedly complained on the call that, “Colonel Sanders called blacks n*****s” and was not publicly criticized, while Schnatter took major heat for his comments about NFL players.

Schnatter’s debacle started last November when, on an earnings call, he blamed Papa John’s flat sales on the NFL player protests. “The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction,” Schnatter said. “NFL leadership has hurt Papa John’s shareholders.” He added that the player protests “should have been nipped in the bud” by the NFL when Colin Kaepernick first started kneeling during the anthem.

But what’s a brand to do when the wrongdoer is the name and face of the company?

Papa John’s is named for John Schnatter. Its logo is an image of his face. Now onlookers wonder whether the brand will change its name. Papa John’s did not respond to a request for comment on Thursday.

Papa John’s press release, Jul. 11, 2018

To be sure, it is not so obvious that naming a company after its founder is a bad idea. As the Harvard Business Review noted last year, two different academic papers on the subject had opposite findings: one found that eponymous companies generate 3% higher returns than other companies, while the other paper found that eponymous companies are 8% less valuable than other companies.

Harvey Weinstein

The Weinstein Company faces the same issue. Last October, just one week after the first New York Times story published reports of Weinstein’s decades of harassment, the company said it was considering a name change.

The company filed for bankruptcy protection in March, but an eleventh-hour $500 million sale in May will keep it alive. But a name change does not guarantee success post-scandal. As Greg Balla, president of branding agency Zenmark, told AdAge at the time, “Almost all name changes today are met with scathing criticism.” It’s difficult for people to forget that a company was deeply tied to someone who has been publicly shamed.

Donna Karan, Martha Stewart, and more

Of course, there are myriad other examples of founders experiencing public scandal, though not as many cases where the company changed its name.

Donna Karan is still apologizing for defending Harvey Weinstein last year, though she had left her day-to-day role at Donna Karan International in 2015. Martha Stewart spent five months in prison in 2004 for her involvement in an insider trading case, but today her company Martha Stewart Living Omnimedia still bears her name. The city of Boston renamed Yawkey Way, the iconic street that ran alongside Fenway Park, in light of new information about racist behavior by Tom Yawkey.

Over the next few weeks, Papa John’s will surely be weighing a name change. On the other hand, the stock soared 11% in the immediate aftermath of Schnatter’s resignation, so perhaps it won’t need to ditch the “Papa.” At the very least, you can bet the logo will change.

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Daniel Roberts is a senior writer at Yahoo Finance, covering media, sports and tech. Follow him on Twitter at @readDanwrite.